The PC market is still awful, and the US dollar is stronger than the company would like.

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Microsoft posted revenue of $20.5 billion in the third quarter of its 2016 financial year, down 6 percent from the same quarter a year ago. Operating income was $5.3 billion, a 20 percent drop, net income was $3.8 billion, down 25 percent, and earnings per share were $0.47, a 23 percent decline.

Over the past few quarters, Microsoft and other tech companies have reported significant impact from the high value of the US dollar and have offered equivalent financial figures that show what their numbers would have been had the value of foreign earnings not been eroded by this conversion. This currency impact was estimated as reducing revenue by about $0.8 billion. The company also reports that there was a $1.5 billion impact from a combination of revenue deferrals due to Windows 10 upgrades and restructuring charges. Excluding this impact, and assuming constant currency values, the company says that its revenue was $22.1 billion (up 5 percent), operating income was $6.8 billion (up 10 percent), and net income was $5.0 billion (up 6 percent).

The commercial cloud annualized revenue run rate—the forecast number that former CEO Steve Ballmer dismissed as "bullshit"—crept up to $10.0 billion; three months ago, it was estimated at $9.4 billion.

Microsoft currently has three reporting segments: Productivity and Business Processes (covering Office, Exchange, SharePoint, Skype, and Dynamics), Intelligent Cloud (including Azure, Windows Server, SQL Server, Visual Studio, and Enterprise Services), and More Personal Computing (covering Windows, hardware, and Xbox, as well as search and advertising).

Productivity and Business Processes revenue was $6.5 billion, up 1 percent year-on-year, with operating income of $3.0 billion, down 7 percent. Gross margin also fell 4 percent. A large part of this drop was due to the strong dollar; in constant currency, revenue was up 6 percent and gross margin up 1 percent. The quarter was marked by an unusually strong performance from Office consumer products and cloud services; after many quarters of large year-on-year declines (sometimes as much as 30 percent), in the most recent quarter Office consumer revenue was up by 3 percent (6 percent constant currency). Office commercial revenue was unchanged (up 7 percent in constant currency).

Both commercial and consumer Office 365 offerings appear to be doing well. Commercial seats are up 57 percent year-on-year. Consumer subscriptions have nearly doubled, from 12.4 million to 22.2 million. The Dynamics range also continues to grow strongly, with revenue up 4 percent (9 percent constant currency).

Intelligent Cloud revenue was up 3 percent to $6.1 billion (up 8 percent in constant currency), but operating income was sharply down by 14 percent to $2.2 billion. Server product and cloud service revenue was unchanged (though up 3 percent constant currency). Enterprise Services revenue was up 11 percent (15 percent constant currency). Among server products, the company saw gains in subscription revenue offset by declines in transactional purchases. Azure revenue was up 120 percent (constant currency), with Azure compute and SQL usage doubling year-over-year.

More Personal Computing revenue was $9.5 billion, up 1 percent (3 percent constant currency), and operating income was also up 57 percent to $1.7 billion. As with Office, the Windows figures showed surprising strength in consumer markets: Windows OEM non-Pro revenue was up 15 percent year-on-year, outpacing the consumer PC market, driven by a higher volume of premium device sales. Windows OEM Pro revenue, however, dropped 11 percent, below the commercial PC market, as a glut of systems from the previous quarter entered the market. As with the server products, 6 percent constant currency growth in Windows subscription revenue was offset by a corresponding decline in transactional revenue.

Total device revenue was down 9 percent, mainly due to a 46 percent decline in phone revenue. Just 2.3 million Lumia phones were sold, down from more than 8 million a year ago, as the collapse due to delayed product releases, lay-offs, loss of confidence, and a near total abandonment by mobile phone carriers continues unabated. A product line that was reaching double-digit share in a number of European markets and growing has been eviscerated. Surface revenue looked better; it was about $1.1 billion, up 56 percent year-on-year, driven by Surface Pro 4 and Surface Book. Gaming revenue grew 6 percent in constant currency, with 11 percent increase in game revenue partially offset by reduced revenue from hardware sales. Xbox Live users are up year-on-year to 46 million, but sequentially this is actually a decline; last quarter, Microsoft had 48 million monthly active Xbox Live users.

Search revenue was up significantly, growing by 18 percent in constant currency, thanks to both higher revenue per search and higher search volume. 35 percent of search revenue in March was driven by Windows 10, indicating that the Bing and Cortana integration in Windows 10 is yielding dividends.

In all, the cloud continues to be the highlight of Microsoft's figures, though the lack of specific detail will no doubt continue to frustrate Steve Ballmer.